Getting Ahead: Developing Competencies for Strategic Leadership

By Rozhan Othman

Most managers start their career at the operational level. As such, they develop their leadership competencies from leading operational activities. However, as they advance further in their organization, the leadership competencies needed to lead effectively is different from the experience theyve gained at the operational level. The role of managers at the senior level has a more strategic focus. The transition from an operational leadership role to a strategic leadership role is not as always easy.
This book discusses the difference between operational and strategic leadership roles. It explains how managers can develop their strategic leadership competencies. HR managers responsible for talent management programs will also find this book useful. This book can help them develop more effective talent development activities to groom managers for the strategic leadership role.

• Language: English
• Publisher: Partridge Publishing Singapore
• Release date: Nov 11, 2016
• ISBN: 9781482881493

Rozhan Othman

Rozhan Othman was a professor in the field of management. He earned his BBA and MBA at Ohio University before going on to do his PhD at University College Dublin. He has written on topics related to leadership and behavior in organizations in various publications. He is also a partner and director at Human Capital Development, a Malaysian management consultancy firm. He is married with four grown-up children. He lives with his family in Bandar Baru Bangi, in the state of Selangor in Malaysia.

Book preview

Copyright © 2016 by Rozhan Othman.

ISBN:      Hardcover      978-1-4828-8148-6

                Softcover        978-1-4828-8147-9

                eBook             978-1-4828-8149-3

All rights reserved. No part of this book may be used or reproduced by any means, graphic, electronic, or mechanical, including photocopying, recording, taping or by any information storage retrieval system without the written permission of the author except in the case of brief quotations embodied in critical articles and reviews.

Because of the dynamic nature of the Internet, any web addresses or links contained in this book may have changed since publication and may no longer be valid. The views expressed in this work are solely those of the author and do not necessarily reflect the views of the publisher, and the publisher hereby disclaims any responsibility for them.

www.partridgepublishing.com/singapore

CONTENTS

Preface

Abbreviations

Chapter 1: From Operational Leadership to Strategic Leadership

Chapter 2: Strategic Leadership Competency Model

Chapter 3: Strategic Thinking: Thinking Ahead to Get Ahead

Chapter 4: Change Management Competencies

Chapter 5: Leading with Conscience

Chapter 6: Persuasion and Influence Competencies

Chapter 7: Developing Talent Competencies

Chapter 8: Leadership Talent Suppressors

Chapter 9: Organisational Failure and Strategic Leadership

Conclusion: Starting the Journey

Glossary

References

TABLES AND FIGURES

Table 1.1: Differences between Operational Leadership and Strategic Leadership

Table 2a: Comparison of Characteristics of Those with Low and High Levels of Achievement Orientation

Table 2b: Comparison of Characteristics of Those with Low and High Levels of Self-Efficacy to Lead

Table 2c: Comparison of Characteristics of Those with Low and High Levels of Need for Cognition

Table 2d: Comparison of Characteristics of Those Who Are Low and High on Business Acumen

Table 9.1: Randell’s Comparison of Healthy and Sick Organisations

Figure 2.1: Strategic Leadership Competency Model

Figure 4.1: Strategic Transformation Road Map

D edicated

to my mother, who inculcated in me my reading habit; my wife for her support, devotion, and understanding; and my children, who always forced me to think strategically about how to deal with them.

Vision is not available for those who cannot see with their own eyes. Real strategists get their hands dirty digging for ideas, and real strategies are built from the occasional nuggets they uncover.

Henry Mintzberg

PREFACE

W riting this book was a journey of discovery. It began when I started researching how Malaysian companies were managing their talent management programs. The initiative started as a research project done in collaboration with Wardah Azimah Sumardi, who was my colleague when I was serving at Universiti Brunei Darussalam. I continued researching the subject with my students after returning to Malaysia.

A consistent theme of many talent management programs is developing leaders for strategic leadership position. However, there is a lack of knowledge on what this entails. This is one of the issues I had to address as I became involved in consulting work through the consulting firm Human Capital Development. There was the need to articulate and model what strategic leadership competencies is all about. We sometimes find that human resource (HR) managers are not able to explain how developing strategic leadership ability is different from the leadership programs they conducted for middle and junior managers.

This gap drove me to start researching what strategic leadership is all about and what competencies are needed to be an effective strategic leader. I had initially presented a paper on this topic at a conference in Geneva in 2014. In 2015, Human Capital Development asked me to conduct a training program on strategic leadership competencies. We received positive reaction from the program’s participants. I decided that it was time that I write everything into a book.

I do not claim credit for everything that is written in this book. I benefited a lot from the work of other scholars. This book also benefited from the work done by my PhD students. Zumalia Norzailan’s research on talent management was important in providing a deeper understanding of talent development. Shazlinda Md. Yusof’s work provided insight on how Japanese managers exercise leadership. I also wish to thank Mr. Eddie Tie, group CEO of VitaLife, and Dato Jamaluddin Ibrahim, group CEO of Axiata, for agreeing to be interviewed for this book project.

I’d also like to thank Human Capital Development for sponsoring the publication of this book. The firm also provided me the opportunity to try the various ideas I’ve learned and discovered from my research in various consultancy projects. Many people shaped my thinking about leadership and strategy. Some are fellow academicians who shared with me their insights. Some were students in MBA and doctoral classes. Some are friends who were my peers when we were student activists. And some are leaders of business organisations as well as NGOs who shared with me their reflections and experiences. I’d like to thank everyone at Partridge Publishing who were involved publishing this book. Again, many people were involved in shepherding the manuscript to make it publishable. I thank you all

The list of people I should thank is long, and it is not possible to mention all the names I am indebted to. I believe they know who they are. I have done my best to avoid mistakes when writing this book. Any shortcomings in this book are mine.

ABBREVIATIONS

CPR: Collective psychological resilience

DVD: Digital video disc

IPR: Individual psychological resilience

KPI: Key performance indicator

LCM: Leadership competency model

LPS: Lean production system

MMC: Malaysia Mining Corporation

MNC: Multinational corporation

NGO: Non-governmental organisation.

Petronas: Petroliam Nasional Berhad (Malaysia’s national petroleum company)

QCC: Quality control circle

TM: Telekom Malaysia

TNB: Tenaga Nasional Berhad (a national electricity company)

CHAPTER 1

From Operational Leadership to Strategic Leadership

Introduction

B reakthrough happens because someone, usually a leader, decides the status quo is unacceptable or unsatisfactory. Typically, this spurs the search for new ideas and innovation. As a result, we see changes and transformations. But not all leaders create such a change. Many would simply loiter around where they currently are. Contentment with the status quo leads them to continue to do more of the same.

The ability to recognise that the status quo is not sustainable or that it will soon become unsustainable and then take the steps to spur the organisation to greater heights is a hallmark of a strategic leader. However, it takes more than just giving speeches about vision and mission to create a strategic shift. It takes more than just having a PR exercise and launching ceremonies to create strategic realignment. Many leaders get lost in doing just that. They spend time in PR exercises and giving noble speeches without understanding how to actually create impact. Strategic leadership effectiveness is about delivering result by creating a leap in performance.

Even though the term ‘strategy’ is often used in business and military planning, there are many examples of good strategies put in place in the public sector, in schools, and even in NGOs. The public sector in many countries has seen significant improvements in their service delivery as a result of adopting new technologies to improve their services. NGOs like Greenpeace have created a significant impact on our awareness of environmental issues. The Alliance for Climate Protection has had a major impact in generating public awareness and activism on climate change.

In business, we see many breakthrough products that have redefined market, competition, and even the way we lead our lives. Smartphones give us computing power in our palms. Green technologies make it possible to not treat the destruction of the environment as an inevitable aspect of modernisation. Hybrid cars make it possible to achieve a high level of fuel efficiency and reduce emissions. The Internet democratised access to information and broke the monopolies of media moguls and governments in the control over information. In addition, it also enabled consumers to perform business transactions from the comfort of their homes. Sites like eBay and mudah.my enable buyers and sellers to transact in virtual markets. In the service industry, discount airlines like Air Asia operate on an innovative business and operational model that makes air travel affordable to more people. Air travel is no longer a privilege of the well to do.

In military strategy, the winning hearts and minds approach in fighting the insurgency in Malaysia proved critical in defeating the communist threat. Civilian population living near jungles were moved to new villages to cut off material support to the Communist Party of Malaya. This, along with military operations, starved the communist fighters and forced them to retreat deep into the jungle. This made them less effective and forced them to focus on their basic survival instead of conducting attacks. Winning the hearts and mind of those who used to support the communist insurgents, whether willingly or reluctantly, was also important in getting high-quality intelligence that is critical is any war. The Americans, however, did not do as well in Vietnam. They were confident that their air power and conventional warfare capabilities would ensure victory. It was the communists who won the hearts and minds of the people, especially in rural areas of Vietnam.

In the sixteenth century, the ability to think strategically proved critical in the war between England and Spain. The English fleet was able to defeat the Spanish Armada in 1588 by building smaller and more manoeuvrable ships to defeat the Spanish armada which relied on bigger but less manoeuvrable ships. The English navy also used canons that had a longer range than the ones used by the Spanish armada. This enabled them to bombard the Spanish ships from a safe distance. The English were also innovative in using ‘hell burners’, burning ships to ram into the Spanish fleet waiting near Calais. It broke up the Spanish formation and made it easier for the smaller but more manoeuvrable British ships to attack. This is another case of addressing a challenge strategically by creatively thinking of new solutions and changing the rules of the game.

On the other hand, there is also a long history of failures in both business and warfare due to a lack of strategic thinking. There are businesses that can’t seem to adapt to their environments. Nokia has exited the cellular phone market even though it once held the biggest market share. Zaitun Industries, recognised as a pioneer in halal cosmetics and consumer goods, is no longer around. Merlin hotels used to be a key landmark in major Malaysian cities but has also faded away. TWA, Pan Am, and Pelangi Air (a regional airline in Malaysia) were key players in their respective markets but no longer fly. Mega TV was one of earliest subscription TV service in Malaysia. It, too, closed up shop.

In warfare, the British failed to defend Malaya from the Japanese invasion because it made all the wrong assumptions and was rigid in the various defensive measures it took. The British assumed that any Japanese invasion would come from the sea. As a result, many fixed fortifications built by the British had their artillery pointed to the east towards the South China Sea. In the end, the Japanese attacked from the south through Thailand.

The Israelis were caught by surprise during the 1973 October War because they had been lulled by repeated Egyptian military exercises across the Sinai and thought that the final troop movement to launch the attack was just another exercise. The Israelis were also overconfident in believing that the Bar Lev line, a long fortification made of sand, was impenetrable. The Egyptian army simply hosed down the sand wall with water pumped from the Suez Canal.

Behind every story of success and failure were leaders. The successful stories were made by leaders who read the situation before them correctly and made the commitment to pursue the course of action that led to their success. On the other hand, failures are partly due to leaders misreading the situation and became victims of the changing environment. In some cases, they read the situation correctly but could not execute the necessary actions. And in some cases, failures happened because leaders were so contented, so disconnected from reality, and so insular that they never bothered to read the situation before them.

In today’s fast-changing world, leaders have to be even more alert of unexpected competitors and unanticipated moves. Nobody in early 2000 would have expected Apple to become a major player in the mobile-phone business. Likewise, nobody would have expected Air Asia, an ailing airline formed by DRB-HICOM in 2001 and then bought over by Tune Air for RM1, to become a major competitor in the region, posing a serious challenge to Malaysia Airlines. Dunkin Donuts would not have imagined that the biggest challenger to its donut business in the Malaysian market would come from Big Apple Donut and Coffee, a local start-up established in 2007. Even Japanese consumer electronics and electrical goods companies are finding their once-dominant positions are now seriously undermined by new players from Korea and China.

Not all leaders are good strategists. Some rose up the ranks after long careers at the operational level. They continue to think and behave like operational leaders. These leaders are not able to refocus their attention on the big picture. Instead of understanding the shape of the forest and how it is changing, they continue to be preoccupied with looking at the trees. Some are precedence-based in their outlook. They act based on what they have grown accustomed to doing in the past. Suggest something new to them, and a typical retort they will give is, We’ve always done it this way, or We’ve never tried this new idea before. Instead of shaping history, these leaders are trapped in history. Instead of leading others forward, they keep people in the past.

A study this author conducted on leaders of Malaysian finance companies during the Asian financial crisis in 1997 illustrates how the ability to think strategically can make a difference in the behaviour of firms. The leaders of these firms were asked whether they had anticipated the crisis or whether it came as a complete surprise. Half of the respondents said they knew the crisis was going to happen even before it started. The other half reported that it came as a surprise. Those who anticipated the crisis took remedial steps immediately. On the other hand, those who did not anticipate the crisis took remedial steps only about two months later.

What contributed to these differences in perception? They all were in the midst of the same conditions. Two things stood out as the differences between these two groups. First, the anticipators knew the crisis was long term. Those who did not anticipate the crisis thought it was just a short-term problem. Second, the anticipators monitored their environments by also examining the regional and global economic environments. Those who did not anticipate the crisis just monitored what their competitors were doing. In other words, the anticipators were looking at the macro-environment and understood that the crisis was going to be a protracted one. On the other hand, those who failed to anticipate the crisis were focused on the micro-environment and did not fully comprehend the dynamics behind the crisis. They might have also accepted the mantra from some politicians that the crisis would be over in two months. It is very obvious here who were the strategic leaders and who had a less strategic outlook.

Among the key competencies needed at the senior level are strategic leadership competencies. These are distinct from the leadership competencies needed at the lower and middle levels. Lower-level leadership is more about supervisory skills and the leadership of teams. Middle-level leadership is about leading operational and tactical issues. Often, they involve dealing with functional-level problems, though it can sometimes involve managing cross-functional collaboration.

Strategic leadership competencies are distinct because they involve the exercise of leadership within a top management team. While members of top management may represent their functional areas, their effectiveness depends on their abilities to act in an integrated manner. As for those leading at the top, they need to have a bird’s-eye view of the organisation and of their competitive environment. The time horizon for their plan is long term, and the problems they have to deal with are often ambiguous, novel, poorly defined, and require a lot of sense making.

Axiata is a Malaysian telecommunication company with presence in many Asian countries and employs 25,000 people across the region. It has a diverse workforce from many countries and has to ensure that it has a sufficient crop of future leaders to lead its operations. Dato Seri Jamaluddin Ibrahim, the group CEO of Axiata, points out that a strategic leader is expected to push the needle. This means that the performance level that is expected from a strategic leader is more than just small incremental improvements. He or she is expected to take the company to the next level. If the company is currently earning RM1 billion, the strategic leader needs to figure out how to make it a RM2 billion a year company. Like a race car driver, the strategic leader needs to boost performance and press on the accelerator to push the company’s speedometer to a higher performance level. This will require going beyond doing more of what the organisation is currently doing. The strategic leader will have to think of the capabilities his or her organisation will need to reach the next level.

Strategic decisions often require coordination across functional areas. A decision on a new product requires coordination between the R&D, marketing, and production functions. The R&D function has to develop the product. Marketing needs to study the market, identify what customers want, and ultimately, how to distribute and sell the product. The production department needs to assess what it will need to produce the new product and the cost to produce it. Even the financial controller needs to assess the budget for the whole initiative and decide how to fund it. The HRM department needs to support the decision by making sure the right people with the right skills are available. All these require considerable coordination across functional boundaries and to develop a common mechanism such as the establishment of cross-functional teams to ensure effective execution. Managing such cross-functional collaboration is part of the responsibility of leaders at the senior level.

In addition, because of the higher ambiguity and novelty of problems at the strategic level, dealing with strategic problems requires more creativity. There are often no precedence or standard procedures on how to deal with these problems. When a competitor introduces a disruptive innovation by using a new technology, it redefines the rules of competition. Sometime it even makes the company’s technologies obsolete. Responding to these moves is much more difficult because it requires more than just incremental changes. There is no recipe or playbook on how to deal with such a situation. This is why Nokia and Research in Motion (makers of BlackBerry) experienced considerable difficulty responding to the emergence of smartphones. In the case of Air Asia’s entry into the airline industry, it changed the way consumers view air travel. Discount airlines like Air Asia basically make air travel a commodity that is price sensitive. Full-service airlines like Malaysia Airlines were not designed to compete as a low-cost service provider and found their once near monopoly position in the domestic market affected. They cannot ignore the appeal of low airfare to customers and cannot price their fare too high.

The search for a solution to these challenges requires considerable creative thinking. Doing what competitors are already doing will, at best, create parity but will not ensure sustainable competitive advantage and success. JetBlue

Table 1.1: Differences between Operational Leadership and Strategic Leadership

Airways in the United States and Malindo Air in Malaysia position themselves as low-cost airlines that come with more comfort and frills. This differentiating move may well help them create a profitable niche. Resourcefulness in seeking new ways to compete is important for strategic leadership.

On the other hand, problems at the operational level are usually more clearly defined. As such, problems are usually not novel. Many of the problems faced are short and medium term. There are often rules and procedures to guide the problem solving. Operational problems are usually dealt at the functional level. Occasionally, cross-functional collaboration is necessary. Operational leadership is about executing well once a strategy has been decided. It involves finding optimum use of resources. Operational managers are often held accountable to short-term outcomes and cost-based control. Productivity is key to operational execution. This does not mean that creativity is totally unnecessary. At the operational level, creative effort is more focused on process innovation to improve efficiency. However, as Corson and Miyagawa point out, as operational leaders move upwards in their organisations, they have to shift from being scorekeepers to strategists. This involves redirecting their focus and ways of thinking.

Dato Seri Jamaluddin Ibrahim explains that managers at the operational level have to think about the immediate impact of their work. For some, this can come in the form meeting their sales or production targets. For other operational managers, this can be whether they’ve been able to meet cost-cutting targets. However, managers at the strategic level have to think about the impact of their decisions and their business on the environment the business inhabit. They have to think about the impact on society, the environment, the economy, and population. It’s no longer just thinking about immediate targets.

Two key adjustments operational leaders have to make as they move to the strategic level positions are to recognise that their thinking has to be more externally oriented and that leadership at this level is no longer just about leading their respective functions. Even though they continue to represent a function, they have to see themselves as organisational leaders. Their effectiveness at this level involves their abilities to understand the external environment and steer the whole organisation to make it more competitive. Beatty and Hughes report that a survey about the job of chief financial officers show that even in a specialised function like finance, chief financial officers spend between 65 and 75 percent of their time on strategic issues. Table 1 summarises the difference between operational and strategic leadership.

Unlearning Old Habits

The different competencies needed by operational leaders as they move up the hierarchy means that they will have to unlearn some of their old competencies and habits and learn new ones. Unfortunately, this does not always happen. Even when managers try to do it, they do not find it easy. Management researchers recognise that human behaviour at work is often shaped by behavioural momentum. Greave explains this essentially means that the influence of past behaviours and habits is so strong that people tend to behave the way they always did even when they accept the need to change. Past habits create a strong momentum that keeps people trapped in their old behaviours. In the case of managers advancing in their careers,